In this week's blog, NERI Co-director Paul Mac Flynn takes a look at what the future of social security should be after the pandemic.
The covid-19 pandemic has dramatically altered the system of social security in Ireland, North and South. To many, such extraordinary measures can only be excused by the extraordinary times that the pandemic has brought. But are the measures that governments on the islands have taken really that extraordinary? In the latest of the NERI report series I take a look at what the future of social security should be after the pandemic.
Before the onset of the pandemic, both the UK and Ireland operated amongst the least generous systems of social security particularly in terms of unemployment insurance. Both countries come toward the bottom of the league table of OECD economies and crucially fall behind most of their European peers.
Additionally, the UK and Ireland are among a handful of European countries that operate flat rate unemployment schemes as opposed to earning linked payments which are the norm for most economies.
The new payments that were introduced in both the UK and Ireland over the pandemic led to a dramatic shift in the financial support provided to those who become unemployed. For those in Ireland in receipt of the Pandemic Unemployment Payment or those in the UK who could participate in the Coronavirus Job Retention Scheme, outcomes were significantly better than they would have been before the pandemic.
However, while the increase was significant, in comparative terms, the UK and Ireland merely went from the bottom of the league table to the upper end of it. Among European and developed economies, the extraordinary measures taken in the UK and Ireland look quite ordinary.
Many of the most productive and competitive economies in Europe operate comprehensive, earnings linked systems of social security. They are competitive and productive not in spite of this, but because of it. Social security protects living standards but also allows for more effective reallocation of labour which is key for an economy adapting to shifts in technology or innovation.
As we face into one of the greatest economic challenges of our age, the climate crisis, we should take lessons from the pandemic. If we are to ask workers to give up jobs in particular economic sectors in order to reduce emissions, then surely, we owe these workers the same as those who gave up their jobs in order to contain the pandemic?
It had taken a pandemic to show the worth of a proper system of social security, but hopefully that lesson will outlast the pandemic.